The National Highways Authority of India (NHAI) today said it plans to issue Rs 10,000 crore tax free bonds in two tranches, first of which will be issued in the first quarter of the next fiscal for Rs 5,000 crore.
"We don't want to raise the entire money at one go and will be going ahead with two tranches. We expect to raise the first tranche of about half the money in first quarter of the next fiscal," NHAI's Member-Finance J N Singh told PTI.
Finance Minister Pranab Mukherjee while presenting the Union Budget for 2011-12 yesterday had said that the government will allow NHAI to raise tax-free bonds worth Rs 10,000 crore in 2011-12.
Welcoming the step, Singh added that the second tranche will be issued in the last quarter of 2011-12, depending upon the market conditions.
He further said that fund raising through long-term tax-free bonds will bring down the costs by about 2%.
"This is certainly a very good step and will allow us to go for cheaper finances. We expect the costs to go down by 2% to about 7% on present market conditions," he said.
The money will be used for land acquisition, outgo on viability gap funding and committed annuity payments among others, Singh said.
NHAI is already in the market with its 54EC capital gains tax exemption bonds, having an interest of about 6%.
However, the tax-free bonds proposed in the Budget are for long-term financing, while 54EC capital gains tax exemption bonds are redeemable after 3 years only, he clarified.
NHAI is engaged in the task of building highways in the country and has plans to construct 35,000 km of highways in the next 4-5 years, translating into building 20 km of roads a day.
It has estimated an investment of about $70 billion (over Rs 3 lakh crore) for the construction of highways in the country of which $40 billion is expected to come from the private sector.
Talking about the customs duty exemption given on import of tunnel boring machines in the Budget, Singh said that this will help NHAI in executing its projects, particularly in Jammu and Kashmir where tunnelling is required for road constructions.
NHAI has 6 projects in Jammu and Kashmir, of which 4 projects have already been awarded for development, he said.
